WASHINGTON--A federal lawmaker who is one of the insurance industry's most vocal critics in Washington suggested at a Congressional hearing today that insurers with Hurricane Katrina claims had cheated the National Flood Insurance Program.

"I am convinced that insurance adjusters billed the Flood Insurance Program for some damage that should have been covered by private wind insurance," Rep. Gene Taylor, D-Miss., testified at a House Financial Services Committee hearing.

Mr. Taylor sharply criticized carriers for handling of claims after Hurricane Katrina and said he would "lay out the case" for a Congressional investigation of insurers at an upcoming hearing.

That session, scheduled for Feb. 28, will be held by the Financial Services Subcommittee on Oversight and Investigations, which is chaired by Rep. Mel Watt, D-N.C.

"For thousands of destroyed properties in Mississippi, insurers assigned all damages to flooding covered by the National Flood Insurance Program, and none to their own windstorm policies," Rep. Taylor said in testimony before the committee.

Mr. Taylor, who sued his own insurer State Farm in a claims dispute after his Gulf Coast home was destroyed by Hurricane Katrina, added that the Mississippi coast "suffered several hours of very destructive hurricane winds before inundation by the storm surge."

Insurers have rejected thousands of claims where wind and storm surge were both involved arguing they are noncompensable under policy flood exclusion language. A federal judge in Mississippi has ruled they must evaluate what percentage of home damage was due to wind, and the state attorney general has sued to invalidate such policies.

The NFIP, he said, paid an average of $142,000 for more than 18,000 flood claims in three counties along the coast when the average policy was only slightly higher at $148,000.

Rep. Taylor said that insurers paid more than 250,000 claims totaling more than $3.5 billion for the 79 counties in Mississippi that are not on the Gulf.

He also claimed that insurers have a "conflict of interest" in that the NFIP gives them the obligation to adjust a claim for wind or water damage.

"The contract between NFIP and an insurance company requires an adjuster to represent the flood program as well as the insurance company," he said.

According to Mr. Taylor, "The federal regulations require the adjuster to make a proper adjustment and apply the same standards to the flood claim as to the wind claim. That certainly did not happen in south Mississippi."

To help resolve the problem, Rep. Taylor said he intends to introduce legislation later this week that would expand the NFIP to allow it to write multiperil policies with premiums based on "actual risk" and no subsidies.

"If this bill is enacted, property owners will be able to buy insurance and know that their damage will be covered," he promised. "They would not have to hire lawyers, engineers and adjusters to try and prove what damage was caused by wind and what was caused by water," he said.

Rep. Charles Boustany, R-La., noted that Hurricane Rita had also wreaked havoc on his area, and said the federal government should help make it easier for insurers to provide coverage to homeowners along the Gulf Coast by making it easier to obtain reinsurance and allowing companies to set aside catastrophe reserves on a tax-deferred basis.

Rep. Charlie Melancon, D-La., also spoke critically of the problems of finding coverage for homeowners, noting that "private insurers have largely given up on Louisiana and other places where it appears they can't make an easy buck."